Home › Market News › Gauging Your Trading in the First Half of 2022
The end of June marked the end of the second quarter and the mid-point of 2022. Traders should be willing to take a self-inventory periodically, and the halfway point of the year is as good a time as any to make such an assessment.
Regardless of whether you expect a glowing report or harsh results, the good news is that by assessing yourself, you’ll have the opportunity to work on improving yourself in the second half of 2022 so you can close out the year in better shape.
Avoidance is a natural mechanism, but it can be very unhelpful. For example, if you’ve been avoiding a deep self-analysis, you may be concerned about the potential data you’ll find. However, these painful interactions are necessary to go to the next level, so let’s get started without delay!
Perhaps your mid-year check-up’s most apparent assessment is your balance sheet. How’s your profitability in 2022? Have you missed, met, or exceeded your goals? Are you profitable?
Only you can project healthy and reasonable profit goals. If you missed your goals, you might assess why. Sometimes it may not be as much as your trading as the environment. However, in most cases, it is about your trade system and execution.
What can you accomplish for the remainder of the year? If you are in great profit, how will you protect your profit and build on your winners? If you are marginally profitable, how can you turn that into substantial winnings for 2022? Finally, if you are down on the year, how might you return to even and perhaps even become profitable?
These are the primary critical questions you should be asking yourself at this point in 2022.
Another factor to consider is how your winning trades relate to your losers. If you are profitable even though you have more losers than winners, you either have exceptional risk management skills or become very lucky. The former is a necessary ingredient to long-term success. The latter, however, is a recipe for a poor finish to the year.
Alternatively, if you are mildly profitable and have considerably more winners than losers, then it may be that your risk management could be enhanced. However, there is an excellent possibility that your winning percentage could dip in the year’s second half, leaving you vulnerable to moving from net profit to loss for 2022.
These are a couple of ways to examine your winning percentage and engage in questions that assist you in critical analysis. The important thing is to detect your data, identify your personal trends, and ask difficult questions.
Another pertinent factor at mid-year is to ascertain data regarding the various markets you are trading. This will be an even more telling exercise for those who trade a wide range of markets. It’s incredible the data we can observe over six months. Some of you will find that specific markets you’ve traded very well, while others you’ve traded poorly.
This analysis will help you determine actions to take in the year’s second half. For example, some markets might appropriately demand greater attention from you; others might be omitted.
Another crucial factor in assessing your trading results from the most recent six months is considering the time of day of your winners and losers. Some platforms will have a feature built-in to assist you in collecting information. For example, some traders may find that the difference between net losses and profits are failed trades and/or failed trading habits at specific times of day – perhaps the busy opening of a session or else during the slowest times of the day.
If you can enhance your weaker performance during a particular time of day, then terrific! However, some may find it more effective to refrain from trading during those vulnerable times while giving more effort to the times with a better track record.
For the last part of this section, it is worthwhile to gather data concerning the various methods you employ in trading. Some traders may use a single strategy consistently across the same market. If that’s you, then you can move on. However, other traders might diversify a bit. In these cases, it is prudent to detect your nuances across these few months.
During which chart time frames did you perform better or worse? Which strategies enhanced or weakened your trading; volume-based, price-based, volatility-based, et cetera? Which approach gave you better or worse results; micro time frames or more prolonged periods?
If you used varied approaches, these are all relevant questions. But, again, if you can enhance your weaknesses, then, by all means, do. However, it might be most helpful to eliminate what didn’t work and concentrate on what has shown to be your proven method of success.
Okay, now let’s get even more personal, beyond your trading performance, and look at your inner life. Mental and emotional health is highly correlated to trading success (or lack thereof), so you must also give yourself a mid-year check-up in terms of your health. Have you had any physical issues to address so far in 2022, or do you expect to need to give time and attention to your body this year? Trading ahead of something like a major surgery could be a way to distract from apprehension, but it may also lead to losses.
What distractions are on your mind? Are your other business affairs in order? When your mental capital is lost on other things, it’s challenging to trade successfully. How about your emotional health and the relationships that surround you? It’s impossible to trade well consistently while being depressed, just as it takes a miracle to trade successfully when you have volatile personal relationships close to you.
Some of these matters may have been significant factors in your results during the first half of this year, or they could be primary considerations during the second half of 2022.
Once you’ve reflected on this content and gathered the necessary data, you have the information to conduct an inventory of your trading during the first six months of 2022. You can then begin making adjustments where applicable and even engage in an intervention before your growing edges become more pronounced.
Some further considerations to tackle include asking yourself, what personal distractions do you think you could encounter in the second half of the year? What are the market factors that could change that could require adjusting your expectations and potential? The crucial questions are whether you can correct or eliminate whatever issues you’ve assessed and how you may be able to enhance and continue to ride what has worked well so far through June.
What do you want for the six months ahead, and what do you expect? How might you make your goals meet your expectations?
It’s good to set reasonable and healthy goals. These goals are not merely to make a profit but also to benefit from the lessons learned and gain the ability to sustain long-term success.
This lifestyle may not be easy, but as traders, you are likely an entrepreneur by way of personality and disposition, which means you are cut out for the challenges. As I have quoted before, Sun Tzu says, “If you know your enemy and know yourself, you need not fear the outcome of 1,000 battles.” This is also true for trading; if you know yourself, your strengths and growing edges, and your market, you should not be afraid. Preparation is vital, followed by a continual fine-tuning of your craft.
This article is a conversation starter to address appropriate ways to move into the second half of this year. Many of these questions are generic, so it will be up to you to apply them to your specific set of scenarios. However, here are ideas regarding resources you can make your own as you develop a unique plan for the remainder of your trading year.
Let’s aim for the best finish to 2022 possible. Until next time, trade well!
